It is important to have a high credit score when you apply for a mortgage or personal loan. Credit agencies want to see you are responsible with your debt management. A young person might only have one credit card while someone 40 years old may have multiple credit cards, a mortgage, and a car loan. It is also important to avoid opening new credit accounts because they will lower your score. An inquiry about your credit history will be made on the new account. This inquiry will not last more than one year.
Recent college graduates have an excellent credit score
Many financial milestones await college graduates in their adult lives. However, with little or no credit history, many of these milestones can be difficult to accomplish. Your credit history will be a major factor in the decisions of many lenders, insurers, employers, and other parties. It is therefore important to build a strong credit score as soon as possible. Bad credit can make obtaining large loans, great car insurance rates, utility service, or other financial services more difficult.
This is the average credit score among recent college graduates. It stands at 689. This is a score that is 12 points below the national average. This is a good score for young people, but getting into one of the tiers will save the most money.
To maintain a high credit score, keep your credit utilization low
Keep your credit utilization ratio low to increase your credit score. This will make it more appealing to lenders and enable you to obtain higher rates and bigger loans. Keeping your credit utilization below 30 percent is a good starting point. However, it is not an exact science.
Credit utilization refers to the percentage of credit that you use. It is responsible for 15 percent your FICO score. Keeping this ratio below 30% is key to establishing a good score. One of the most effective ways to lower your utilization ratio is to apply for a credit card. This will also boost the total credit limit.
It is important to pay your credit cards on a timely basis to improve your credit score. Your credit utilization percentage is what lenders use to determine your repayment risk. High credit utilization indicates you are likely to overspend, while a low percentage of credit utilization shows you are a responsible credit shopper.
By practicing responsible financial behaviours, you can improve your credit scores
One of the best ways to increase your credit score is to practice responsible financial habits. This includes paying your bills in time and maintaining a low credit usage ratio. Don't max out credit accounts. Reliable behavior can increase your credit score quickly. Your credit score could drop rapidly if you fail to pay your bills in a timely manner.
Your payment history accounts for 35 percent of your total credit score, so making your payments on time is crucial. Not only will this show your creditors that you are responsible with debt, it will also show that you will be able to stick to your payment deadlines. You must make every payment on your credit card on time. A missed payment can cause credit scores to be damaged. You should make your next payment as soon as you can.
Your credit score is the number used by lenders to determine whether they will lend you money. Your score can vary from 300 to 851, and different factors can impact it. For example, late payments can decrease your score by 30 points or more. However, paying off a collection debt does not take it off your credit report. It will remain on your credit report for seven more years.